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Dive Brief:
- Academic Partnerships agreed to buy Wiley’s online software management business The base price is $110 million, according to documents filed Tuesday with the U.S. Securities and Exchange Commission.
- Earlier this year, publishing giant Wiley announced plans to sell a unit called Wiley University Services and focus on its other businesses, such as research and publishing. The two companies plan to close the deal by early 2024.
- Under the agreement, Academic Partnerships may also pay Wiley $40 million between fiscal years 2025 and 2026. depending on whether the acquired business unit meets its revenue targets. Wiley will also acquire 10% of the common units of Academic Partnership’s parent company.
Dive Insight:
Academic Partnerships It is one of the largest online program management companies, or OPMs, in the United States It has made its mark by helping regional public universities launch and implement online programs.
Once Academic Partnerships completes the deal – which is subject to regulatory approval and review under federal antitrust law – the company will serve more than 125 colleges.
Academic Partnerships CEO Fernando Bleichmar appreciated the deal in a statement on Tuesday.
“There is a growing demand worldwide for high-quality, affordable online degree programs in workforce-related fields,” Bleichmar said. “Bringing AP and Wiley University Services together will enable the combined company to help universities meet students with high-quality, timely online education in our rapidly changing world.”
The deal comes after Wiley announced its plans in June Opting out of OPM services. In fiscal year 2023 unit brought in $208.7 million, down nearly 8% from the prior year, According to SEC filings.
The sale is another sign of the big changes underway in the OPM market, Phil Hill, a technology market analyst and consultant, said, points to recent challenges faced by other high-profile companies.
Pearson, another publishing company, it was also announced in March OPM sells the segment to a private equity firm after losing one of its biggest clients, Arizona State University.
Nor is it the only company to lose high-profile contracts.
Educational company 2U announced their separation earlier this month with the University of Southern Californiaone of their oldest and largest clients, most of the online degree programs they work with.
The company also reported flat revenue in its rates business for the third quarter of 2023. 2U’s stock price has since fallen to about $1. It is a long way from the 2018 high above $90.
“It’s just been a bloodbath financially,” Hill said.
OPMs also face criticism for their readiness for business models and potential regulatory changes.
As of April, Wiley University Services has contracts with 64 higher education institutions, mostly revenue share agreements, According to SEC filings. Academic Partnerships also uses revenue share contracts.
Under these arrangements, OPMs typically meet the capital needed to launch online programs and provide services such as marketing, recruiting, and course design. In return, colleges give OPMs a portion of tuition revenue.
Those deals have raised concerns among some Democratic lawmakers and policy advocates that they raise the cost of online education and encourage OPMs to use aggressive recruiting tactics.
There are criticisms of these agreements installed in recent yearssome groups dispute long-term deals that lock college programs into handing over most of their revenue to a third-party provider.
Amid these concerns, the US Department of Education announced earlier this year that it would do so review regulatory guidelines allows recruiting companies to sign revenue share agreements with colleges. He also asked for public opinion on the administration.
In a statement submitted to the Department of Education in March, Academic Partnerships defended that revenue share agreements force the company to only hire students who will succeed in their online programs. He also argued that current guidance allows under-resourced colleges to compete in the online education space.